4th of July, 2011

The American Way

To some, the American Way is right up there with Truth and Justice, just like in the intro to the old Superman TV show. ("...to fight...for truth, justice and the American Way!") But what is the American way anyway (and what does it have to do with business and economics)?

Probably the biggest part of the American way—and something that still drives us today--is the first self-evident truth stated in the Declaration of Independence on this date 235 years ago:

All men are created equal.

Of course we add women to that now.

And of course we all know that no matter how much of an article of faith that statement is, individuals do vary almost infinitely in their talents, abilities, motivations, honesty/dishonesty, etc.

But in the context of 1776, that statement was pointed straight at the heart of the basic social order of the Old World. In those days, an individual’s life was determined by his birth. If he was born into a lower class, he stayed in that lower class. If he was born into an upper class, he stayed there, even if he was a total idiot.

Many societies throughout history have been stratified in that way. But it overlooks what could be called an inconvenient truth: that people with talent, brains or “the right stuff” can come from any level of society and any race or ethnic group.

And what is the basic injustice? I would argue that it is summed up pretty simply as this: not treating a person the way he or she deserves to be treated.

If a person has talents and potentials that cannot be used because of an accident of birth, it is an injustice. Not only that, but it is a serious loss for the society as a whole. We need talented people, and we need to find them wherever they may be.

Inspired by the idea that all are created equal, we have tried to do all we can to give everybody a fair chance in life. Early on we instituted universal free public education. More recently we have created programs like Head Start to try to break down obstacles presented by extreme poverty in early childhood. We have also done our best to make a college education available to anyone who wants it. We have state universities, federal grants and loans and an extensive centralized system of evaluating financial aid applications. Individual colleges and universities also have scholarship programs to ensure that talented students from low-income backgrounds can attend their school.

The bottom line is that if any person has a desire for higher education and has a brain cell or two to rub together, it will not be a lack of money that will prevent it. Life issues may intervene, but probably not money for tuition.

We also have laws and rules against discrimination by superficial things like skin color, religion, etc.

And we have many other programs, policies, laws and crusades that militate towards the proposition that all men (and women) are created equal.

It could very well be that we overdo it at times—that we often ignore that reality that individuals vary from one to the other. But from the viewpoint of the society (and the economy), what do all these things do?

You might say that more than anything else, they stir the pot. The society needs talented people, and all these programs etc give them an opportunity to rise. This is good for the society, and for the most part (I say “the most part” because some of these efforts are counter-productive and have excessive costs), it is good for the economy.


The converse side of the American way is that clunkers have the opportunity to fall. Some people are born rich, but they don’t all stay that way. “A fool and his money are soon parted.” There are plenty of opportunities for people to blow their money, make foolish choices, fail at pet projects, etc. We don’t need people at the top who are dead weight.

Another part of the system is that even people who are born rich and stay that way by doing nothing except collecting interest and dividends, well, even they are contributing something. Their money is invested in banks and stocks, and therefore it is being used by entrepreneurs, corporations, etc, who know how to use it to make more money, create wealth, hire people and generally keep the economy buzzing.

The American Way is a complex and varied thing, and it is also part of what has made our economy the strongest in the world.